Economy will grow faster under Labour and Lib Dem plans, says NIESR

Labour and Liberal Democrat spending plans would see the economy grow at a quicker rate than under the Conservatives

Labour and Liberal Democrat spending plans would see the economy grow at a quicker rate than under the Conservatives, according to a new report by the National Institute for Economic and Social Research (NIESR).

In 2018, the economy under Labour and Lib Dem plans would grow 0.2 per cent faster than current GDP estimates, compared to 0.1 per cent under the Conservatives. By 2019, Labour and Lib Dem plans would see GDP growth at 0.5 per cent above current estimates compared to a rate of 0.2 per cent for the Tories, according to the think tank.

The analysis was carried out by Simon Kirby, a principal research fellow at NIESR, and compared the 2017-19 fiscal plans of the three main parties with its own forecasts based on coalition government spending proposals.

The report states:

“NIESR’s analysis highlights the near-term positive effects to GDP growth, real consumer wages and unemployment that stem from the implied [Labour and Liberal Democrat] alternative plans to the current coalition government’s. These alternatives are funded via greater borrowing/smaller surpluses than implied by the coalition’s plans. “

But positive effects on GDP from Labour and Liberal Democrat plans will be “only temporary”, according to NIESR. “…in each scenario, in the longer-run the GDP is unchanged from its baseline level,” it adds.

While the paries themselves “will disagree with aspects of our analysis” it is “our view that this is a fair reflection of the potential macroeconomic impacts of their different approaches”, the think tank adds.